Brussels, 17/01/2002 (Agence Europe) - When its endorses the recommendations of the ECOFIN Council on the Stability Programmes of nine Member States on 30 January, the European Commission may decide to send Germany and Portugal official warnings about their public deficits, the first step in a disciplinary procedure that could lead to hefty sanctions being imposed, according to Community sources on Thursday.
Against the backdrop of the current economic slowdown which is having a serious impact on the two countries' public finances, Germany announced on Tuesday that its deficit reached 2.6% of GDP in 2001, close to the infamous 3% upper limit set by the Maastricht Treaty and well above its Stability Programme forecasts. The German federal statistics office reported a debt/GDP ratio of 59.5% in 2001, a shade under the maximum allowed under the Maastricht Treaty (60%). Portugal's deficit reached 2.2% of GDP in 2001, twice the forecast level. Portugal did not follow the Commission's recommendations on cutting public spending.
Anonymous sources hinted that while Commission officials do not expect the situation in Germany to deteriorate to the extent where the country breaks through the 3% barrier, the sending of an official warning cannot be ruled out.
In Berlin, the German Finance Minster, Hans Eichel, admitted that the weak economy did not bode well for the budget deficit but pledged to take measures to remedy the situation, such as postponing planned tax cuts.
EP plenary session (continued)